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Clearlake Capital has inked a deal to buy the investment arm of Natixis, giving the private equity firm entry into the fast-growing private credit industry as asset managers race to get a foot in the door.
Clearlake, co-owner of English Premier League club Chelsea Football Club, has agreed to buy Europe-focused credit investment firm MV Credit for hundreds of millions of dollars, according to people familiar with the matter.
The transaction will increase Clearlake’s assets under management to more than $90 billion and expand its credit business by approximately $5 billion.
The acquisition comes as private equity firms and traditional asset managers alike are spending billions to buy investment companies and build their own services in an effort to gain a foothold in the $1.7 trillion private credit industry.
The MV Credit acquisition will give Santa Monica, California-based Clearlake entry into the $800 billion direct lending market, in which asset managers make personal loans to companies without going through banks.
The addition of MV’s collateralized loan obligation business also strengthens Clear Lake’s public credit investment team.
Clear Lake is one of the fastest-growing private equity firms, but a decade ago it had less than $2 billion in assets under management. The firm has been investing heavily in 2020 and 2021, and like other buyout firms, its portfolio is now being challenged by rising interest rates.
The firm has capitalized on past downturns to invest in distressed debt (its co-founders are veterans of space investing and corporate turnarounds), and Clearlake has steadily expanded its credit offerings.
The firm acquired CLO manager White Star Asset Management in 2020. In 2022, it unsuccessfully tried to buy credit manager CBAM, then owned by Todd Boley’s Eldridge Industries.
The CBAM auction ultimately brought Clearlake and Boley closer together, with the pair teaming up to try to buy Chelsea in 2022.
“Going into the credit business has made us better investors,” Clearlake co-founder Jose E. Feliciano told the Financial Times. “The credit business is often like the canary in the coal mine, and it has a direct impact on the private equity business.”
Feliciano said Clearlake has been exploring acquiring other credit transactions in recent years, adding that the company plans to expand MV’s direct lending business, which could include new funds and permanent capital vehicles, and eventually expand into the United States.
“This positions us well in a fast-growing market and strengthens our presence in Europe,” he said. “Most importantly, it makes us more relevant for our customers. [investors]”…I still have one more arrow in my quiver.”
Clearlake is financing the acquisition with cash on hand and a revolving credit facility after previously raising capital by selling shares in the business to Dyal Capital (now part of Blue Owl) and Goldman Sachs’ Petershill Partners private equity unit.
The asset management industry is experiencing rapid consolidation, with traditional private equity firms strengthening their infrastructure and credibility in an effort to build businesses that generate stable fees.
Private equity group TPG last year bought credit investment firm Angelo Gordon LLP. Blue Owl announced a deal earlier this year to buy Atalaya Capital Management LLP for $450 million, just months after Brookfield announced it was buying a majority stake in aviation-focused lender Castle Lake LLP for $1.5 billion.
According to data provider LSEG, the asset management industry has seen around $32 billion in acquisitions so far this year.
Demand for private credit remains unmet, offsetting a decline in demand for traditional buyout funds. Investors are attracted by the relatively high yields on offer, which are often advertised as 10% or more.
“Demand for private credit continues to grow and our partnership with Clearlake allows us to better serve the needs of our clients around the world,” said MV CEO Frederic Nadal.
Natixis declined to comment.
